Mulhern's Properties Inc v Bank of Queensland
[2013] FCA 401
•3 May 2013
FEDERAL COURT OF AUSTRALIA
Mulhern’s Properties Inc v Bank of Queensland [2013] FCA 401
Citation: Mulhern’s Properties Inc v Bank of Queensland [2013] FCA 401 Parties: MULHERN'S PROPERTIES INC v BANK OF QUEENSLAND LTD File number: NSD 2174 of 2012 Judge: FLICK J Date of judgment: 3 May 2013 Catchwords: PRACTICE AND PROCEDURE – application for leave to appear for a corporation – evidence as to ability of corporation to fund a lawyer – need for the Court to have the assistance of a lawyer – complexity of the facts and issues – ability to provide objective assistance – leave refused
PRACTICE AND PROCEDURE – application for summary judgment – application to strike out statement of claim – abuse of process – ambiguous and embarrassing pleadings – statement of claim struck out
PRACTICE AND PROCEDURE – any order that is appropriate in the interests of justice – not a power unconfined by reference to pleadings or principal relief claimed
Legislation: Fair Work (Registered Organisations) Act 2009 s 6
Federal Court of Australia Act 1976 s 4, 31A
Federal Court Rules2011 rr 1.32, 4.01, 16.02, 16.21
Federal Court Rules 1979 Order 9 r 1(3), Order 11 r 16Cases cited: AA Shi Pty Ltd v Avbar Pty Ltd (No 4) [2010] FCA 878
Australian Competition and Consumer Commission v Craftmatic Australia Pty Ltd [2009] FCA 972
Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27, 227 ALR 425
Burrup Fertilisers Pty Ltd v Oswal (No 2) [2011] FCA 731
Christou v Stantons International Pty Ltd [2010] FCA 1150
Damjanovic v Maley [2002] NSWCA 230, 55 NSWLR 149
Dupas v The Queen [2010] HCA 20
Favell v Queensland Newspapers Pty Ltd [2005] HCA 52, 79 ALJR 1716, 221 ALR 186
Flower & Hart v White Industries (Qld) Pty Ltd [1999] FCA 773, 87 FCR 134
H 1976Nominees Ply Ltd v Galli (1979) 40 FLR 242
Hicks v Ruddock [2007] FCA 299
Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117, 178 FCR 401
Melaleuca of Australia & New Zealand Pty Ltd v Duck [2005] FCA 1481
Morton v Vouris (1996) 21 ACSR 497
Pacific Boating Group Pty Ltd v Freedom Boating Club Pty Ltd [2012] FCA 72
Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405
Pearce v Mulhern [2010] FCA 446
Priest v New South Wales [2006] NSWSC 12
Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393, 51 ACSR 278
Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949
Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699
Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [2013] NSWSC 36
Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69
Worchild v University of Queensland Law Society [2006] FCA 1078, 234 ALR 179
Wright Rubber Products Pty Ltd v Bayer AG [2008] FCA 1510Date of hearing: 22 March 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 46 For the Applicant: Mr R Mulhern Counsel for the Respondent: Mr G Lucarelli Solicitor for the Respondent: DibbsBarker Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 2174 of 2012
BETWEEN: MULHERN'S PROPERTIES INC
ApplicantAND: BANK OF QUEENSLAND LTD
Respondent
JUDGE:
FLICK J
DATE OF ORDER:
3 MAY 2013
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The Statement of Claim filed on 18 December 2012 is struck out in its entirety.
2.The Interlocutory Application filed by the Applicant on 23 January 2013 is dismissed.
3.The Interlocutory Application filed by the Applicant on 11 March 2013 is dismissed.
4.Save as to order 1, the Interlocutory Application filed by the Respondent on 5 March 2013 is dismissed.
5.The Applicant is to pay the costs of the Respondent.
6.The proceeding is stood over to 9.30 am on Thursday 30 May 2013 for the purpose of giving directions as to the future conduct of the proceeding.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 2174 of 2012
BETWEEN: MULHERN'S PROPERTIES INC
ApplicantAND: BANK OF QUEENSLAND LTD
Respondent
JUDGE:
FLICK J
DATE:
3 MAY 2013
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The Applicant in the present proceeding is Mulhern’s Properties Inc (“Mulhern’s Properties”). The Respondent is the Bank of Queensland Ltd (“Bank of Queensland”).
The Originating Application filed on 18 December 2012 seeks:
·damages in the sum of $84.5 million;
·interest; and
·costs.
The Statement of Claim, also filed on 18 December 2012, seeks to plead a variety of matters and causes of action. Mulhern’s Properties also caused to be filed on 23 January 2013 an Interlocutory Application which seeks summary judgment in the sum of $42 million. A more recent Interlocutory Application filed by Mulhern’s Properties on 11 March 2013 seeks more adventurous orders, being (without alteration):
1.Pursuant to Rule 1.32 and in accordance to Rule 1.34 Richard Mulhern is given leave to represent the applicant.
2.That the made Australian Bankruptcy of Michael Richard Mulhern on February 3rd 2010 be annulled pursuant to s 153 of the Bankruptcy Act for a compelling non compliance or alternatively pursuant to Rule 1.32 for clear abuse of process.
3.That pursuant to Rule 1.32 Richard Mulhern’s Irish Passport & United States of America Green Card seized from him on the 8th January 2012 at his entry at Sydney Airport be returned to him.
4.That pursuant to Rule 1.32 Richard Mulhern’s Australian Passport (now invalid) be returned to him so he can attend to his obligation with The Australian Department of emigration authorities.
5.That the made Australian Bankruptcy by Bank of Queensland of Jacqueline P. Mulhern on the 3rd of September 2012 be annulled pursuant to s 153 of the bankruptcy Act for non compliance or alternatively pursuant to rule 1.32 for deliberate abuse of process.
6.Pursuant to Rule 1.32 of the Applicants interlocutory application filed on 23 January 2013 (default judgment) be ordered by the NSW Honourable Federal Court of Australia with payment effected by 1st April 2013 mitigate further commercial damages been affected on the applicant.
7.Such other orders as the honourable court deems appropriately for the future conduct of the substantive damages claim.
8.Costs.
The Bank of Queensland filed in Court on 5 March 2013 its own Interlocutory Application. The Bank also seeks a variety of orders, including an order that summary judgment be entered in its favour pursuant to s 31A of the Federal Court of Australia Act1976 (Cth) (“Federal Court of Australia Act”). One of the other orders sought is that the Statement of Claim filed on 18 December 2012 be struck out pursuant to Rule 16.21 of the Federal Court Rules2011.
When the matter came before the Court on 5 March 2013 Mr Mulhern sought to appear on behalf of Mulhern’s Properties. But no application for leave had been made. The Interlocutory Application later filed on 11 March 2013 sought to rectify that omission. On 5 March 2013 the hearing of all Interlocutory Applications, including any to be later filed by Mulhern’s Properties, was stood over to 21 March 2013. At the outset of that hearing there then emerged considerable uncertainty as to the evidence sought to be relied upon by Mulhern’s Properties. Mr Mulhern also asserted that affidavits that had been filed by the Bank of Queensland had not been received by him. Whether that was so or not, the hearing of the Interlocutory Applications was stood over to 22 March 2013.
The hearing of all three Interlocutory Applications proceeded on 22 March 2013. Although it may otherwise have been preferable to have heard only some of the claims for interlocutory relief in advance of the others, it was considered to be more prudent to allow Mr Mulhern the opportunity to advance all such evidence and submissions as he considered appropriate. An obvious and continuing source of grievance asserted by Mr Mulhern was his sense of “oppression” at the hands of the Bank of Queensland and others.
Although no express order was made to this effect, Mr Mulhern was permitted to appear for Mulhern’s Properties on 22 March 2013 for the purposes of the hearing of these Interlocutory Applications.
It is relevantly concluded that:
·the Statement of Claim should be struck out in its entirety;
and that:.
·a more general order permitting Mr Mulhern to appear on behalf of Mulhern’s Properties on any future occasion should not be made.
Brief reference is nevertheless made to some of the other relief sought by Mulhern’s Properties lest it be considered that the “merits” of the claims sought to be advanced have not been considered.
THE STRIKING OUT OF THE STATEMENT OF CLAIM
The Bank of Queensland’s Interlocutory Application of 5 March 2013 seeks an order that the Applicant’s Statement of Claim be struck out.
The function of a pleading as set forth in a statement of claim is conveniently set forth in Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 by Mason CJ and Gaudron J as follows:
The function of pleadings is to state with sufficient clarity the case that must be met ... In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision.
See also: Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405 at 413 per Beaumont J.
The content of a pleading is further addressed in r 16.02 of the Federal Court Rules2011 which provides as follows:
Content of pleadings — general
(1) A pleading must:
(a)be divided into consecutively numbered paragraphs, each, as far as practicable, dealing with a separate matter; and
(b)be as brief as the nature of the case permits; and
(c)identify the issues that the party wants the Court to resolve; and
(d)state the material facts on which a party relies that are necessary to give the opposing party fair notice of the case to be made against that party at trial, but not the evidence by which the material facts are to be proved; and
(e)state the provisions of any statute relied on; and
(f)state the specific relief sought or claimed.
(2) A pleading must not:
(a)contain any scandalous material; or
(b)contain any frivolous or vexatious material; or
(c)be evasive or ambiguous; or
(d)be likely to cause prejudice, embarrassment or delay in the proceeding; or
(e)fail to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or
(f)otherwise be an abuse of the process of the Court.
(3) A pleading may raise a point of law.
(4)A party is not entitled to seek any additional relief to the relief that is claimed in the originating application.
(5)A party may plead a fact or matter that has occurred or arisen since the proceeding started.
A pleading which does not satisfy these requirements may be “struck out”. The circumstances in which a party may apply to the Court for the making of such an order is now addressed by r 16.21 of the Federal Court Rules2011. That rule provides as follows:
Application to strike out pleadings
(1)A party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading:
(a)contains scandalous material; or
(b)contains frivolous or vexatious material; or
(c)is evasive or ambiguous; or
(d)is likely to cause prejudice, embarrassment or delay in the proceeding; or
(e)fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or
(f)is otherwise an abuse of the process of the Court.
(2)A party may apply for an order that the pleading be removed from the Court file if the pleading contains material of a kind mentioned in paragraph (1) (a), (b) or (c) or is otherwise an abuse of the process of the Court.
The counter-part provision to the current r 16.21 was formerly to be found in Order 11 r 16 of the now-repealed Federal Court Rules.
The principles to be applied when exercising the discretion remain common to both the former Order 11 r 16 and the current r 16.21. That discretionary power will only be exercised with “great caution” (Favell v Queensland Newspapers Pty Ltd [2005] HCA 52 at [6], 79 ALJR 1716, 221 ALR 186 at 189 per Gleeson CJ, McHugh, Gummow and Heydon JJ) or with “exceptional caution”: Morton v Vouris (1996) 21 ACSR 497 at 513 per Sackville J. See also: Burrup Fertilisers Pty Ltd v Oswal (No 2) [2011] FCA 731 at [21] per McKerracher J. In Wright Rubber Products Pty Ltd v Bayer AG [2008] FCA 1510, Tracey J helpfully summarised the principles as follows:
[5]The principles governing the exercise of the Court’s power summarily to dismiss a claim on the ground that it discloses no reasonable cause of action, the principles which govern pleadings in this Court and the relevant authorities are conveniently summarised by Weinberg J in McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at 415-421. It is not necessary to restate, at length, his Honour’s exposition of the relevant rules and the statements of principle which emerge from the cases to which he refers. It is sufficient, for present purposes, to note that:
·The power to dismiss a claim because it discloses no reasonable cause of action will not lightly be exercised …
·The purpose of pleadings is to define the issues with sufficient clarity such that respondents understand, and have the opportunity to meet, the case made against them …
·A statement of claim must plead all the material facts necessary for the purpose of formulating a complete cause of action. If it does not it is liable to be struck out …
·It is not sufficient for the pleader to state conclusions drawn from unstated facts…
·There will be cases in which the power to strike out pleadings will not be exercised notwithstanding a failure to plead all material facts. Such restraint will be appropriate where the deficiency causes no confusion and does not raise issues of substantive principle … and where deficiencies can be overcome by ordering the provision of particulars or the furnishing of affidavits…
·Not all conclusionary pleadings will be struck-out as being deficient …. Whether or not such a pleading should be struck out will depend on whether or not the facts are pleaded at too great a level of generality….
Appl’d: Christou v Stantons International Pty Ltd [2010] FCA 1150 at [3]. A “pedantic approach” should not be pursued: Australian Competition and Consumer Commission v Craftmatic Australia Pty Ltd [2009] FCA 972 at [14] per Logan J.
With reference to the term “embarrassment”, it has been said that a pleading will be embarrassing, “where it is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him”: Priest v New South Wales [2006] NSWSC 12 at [34]. The term “refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense”: Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393 at [18], 51 ACSR 278 at 284 per Tamberlin J.
“What amounts to abuse of court process is insusceptible of a formulation comprising closed categories. Development continues”: Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 at [9], 227 ALR 425 at 428 per Gleeson CJ, Gummow, Hayne and Crennan JJ. From “early times” the courts have had an “inherent power to see that their processes were not abused and that power existed to enable the courts to protect themselves and thereby safeguard the administration of justice”: Dupas v The Queen [2010] HCA 20 at [14] per French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ.
In Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 French J observed as follows as to the nature of what might constitute an abuse of process:
[69]The public interest considerations underlying the power of courts to stay or dismiss the proceedings for abuse of process extend to preventing the waste of judicial resources and their use for purposes unrelated to the determination of genuine disputes. They include the necessity of maintaining confidence in, and respect for, the authority of the courts …..
[70]The power to strike out a statement of claim or to dismiss an application as an abuse of process is to be exercised sparingly and upon an examination of the relevant circumstances of the particular case before the Court. As Giles CJ said in State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Torts Reports 81-423 (at 64, 089):
‘... whether proceedings are, or an aspect of proceedings is, an abuse of process because a party seeks to relitigate a issue already decided depends very much on the particular circumstances. The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice...’
His Honour set out a non-exhaustive list of matters relevant to the determination whether there was an abuse of process in connection with the issue to be litigated in the second proceedings. These factors were:
‘(a)the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or an ultimate issue;
(b)the opportunity available and taken to fully litigate the issue;
(c)the terms and finality of the finding as to the issue;
(d) the identity between the relevant issues in the two proceedings;
(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; all part of –
(f)the extent of the oppression and unfairness to the other party if the issue is relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and
(g)an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process.’
Appl’d: Worchild v University of Queensland Law Society [2006] FCA 1078 at [47] to [48], 234 ALR 179 at 189-190 per Spender J.
Notwithstanding the manner in which r 16.21(1) has been drafted, one or other of the “grounds” there set forth may well overlap. The manner in which a pleading is drafted may bring it within more than one of those “grounds”. When discussing the ambit of the power conferred by s 31A of the Federal Court of Australia Act Mansfield J in Rana v Commonwealth of Australia [2013] FCA 189 has thus observed:
[41]In Pickering v Centrelink [2008] FCA 561, McKerracher J made the following useful observations at [27] about when a proceeding is frivolous, vexatious and/or an abuse of process:
In NBGZ v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 143 FCR 434, although the majority (Allsop and Conti JJ) reached a different ultimate conclusion, there is, with respect, a helpful collection of authorities by Gray J on “frivolous” at [16]–[22] from which it may be concluded that if, despite whatever attempts are made to discern a cause of action in a case, it is still not arguable, it is frivolous. A matter is also frivolous when it is without substance or groundless or fanciful: Bullen & Leake Precedents of Pleadings (1975) 12th ed, p 145. However such matters will only be struck out when it is so obviously frivolous that to put it forward, would be an abuse of the process of the court: Young v Holloway [1895] P 87. The words “frivolous” or “vexatious” are used either separately or in conjunction, or interchangeably with the expression “abuse of the process of the court”: Young v Holloway [1895] P 87 at 90–91.
[42]Proceedings have been held to be “vexatious” in the past if they are instituted with the intention of annoying or embarrassing the person against whom they are brought; they are brought for collateral purposes, and are not for the purpose of having the court adjudicate on the issues to which they give rise; irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless; or they are scandalous, disclose no reasonable cause of action, are oppressive, are embarrassing, or are an abuse of the process of the court: see generally Attorney-General v Wentworth (1988) 14 NSWLR 481.
[43]It has also been pointed out that “vexatiousness” is a quality of the proceeding rather than a litigant’s intention so that the “question is not whether they have been instituted vexatiously but whether the legal proceedings are in fact vexatious”: Re Vernazza [1960] 1 QB 197 at 208.
The Statement of Claim as presently pleaded suffers from such a myriad of difficulties that it should be struck out in its entirety. The Bank of Queensland is correct in its submission that it falls within a number of the “grounds” set forth in r 16.21(1).
One of those difficulties is that Mulhern’s Properties apparently seeks to re-agitate issues which have previously been resolved by a Judge of this Court. Thus, paragraphs [3] and [4] of the Statement of Claim states (without alteration) as follows:
3.The Mulhern Group comprised various companies namely, CELTIC PACIFIC PROPERTIES PTY LTD ACN 071 232 230,DICEY’S GLADSTONE PTY LTD ACN 098 084 372, GLADSTONE UNITED PTY LTD ACN 098 085 708,MULHERN CONSTRUCTIONS PTY LTD ACN 060 410 102,& WAK GLADSTONE PTY LTD ACN 098 226 343. These companies were & will be collectively referred to as the Mulhern Group.
4.The Plaintiff was a shareholder in the Mulhern Group,with such shares being held on trust for it by Jacqueline Patricia Mulhern who was the sole director.
Contrary to the allegation in paragraph [4], in Pearce v Mulhern [2010] FCA 446, Reeves J made declarations that as at 3 February 2010:
·Mr Mulhern was the registered holder of all of the issued share capital in Mulhern Constructions Pty Ltd and Dicey’s Gladstone Pty Ltd;
·Mr Mulhern was the registered holder of one half of the issued share capital in Celtic Pacific Properties Pty Ltd (with Mrs Mulhern holding the other half);
·Celtic Pacific Properties Pty Ltd was the registered holder of all of the issued share capital of WAK Gladstone Pty Ltd; and
·Mulhern Constructions Pty Ltd was the registered holder of all of the issued share capital in Gladstone United Pty Ltd.
In that proceeding, Mr Pearce was one of the trustees in bankruptcy of Mr Mulhern. Mrs Mulhern was named as the First Respondent to the proceeding heard and resolved by Reeves J. Even if there be no issue estoppel as between Mulhern’s Properties and the Bank of Queensland, the ability of a party with a common interest to re-litigate issues which have been judicially resolved is not a course to be encouraged.
Another difficulty is the failure to identify in the Statement of Claim either the material facts relied upon or the manner in which such facts are said to constitute a cause of action. Reference may thus be made to the following allegations in the Statement of Claim:
8.On 19 May 2010 an unconditional offer was made to the Defendant to pay out the Mulhern Group loans with the Defendant in full. In breach of the duties owed by the Defendant this offer was not accepted.
9.A dispute developed between the Mulhern Group & the Defendant in relation to the interest the Defendant was charging the Mulhern Group.
10.Michael Richard Mulhern was made a bankrupt in Australia. The Defendant advised Mrs Mulhern of this on 1 March 2010. This bankruptcy is disputed. A Pre-annulment Agreement was offered to the sole director of the Mulhern Group to sign, to remove Mr Mulhern from Bankruptcy. That document was not signed and the Defendant was advised of this on 17 & 19 May 2010. The Defendant appointed Receivers to the Mulhern Group on 24 May 2010 without notice or demand & these receivers seized all assets of the Mulhern Group including cash, equipment & stock of $2.5M.
11.The actions of the Defendant in appointing Receivers were without basis at law or otherwise.
12.Further, in breach of its duties owed the Defendant released confidential information on various bank accounts of parties associated with the Mulhern Group which impacted on the Plaintiff including advising Mark Pearce of bank accounts held in the USA by Mr & Mrs Mulhern.
13.The Defendant was in breach of its contractual obligations with the Mulhern Group by charging a rate of interest over & above the agreed rates as stated on 15 March 2007. This overcharging affected the Mulhern Group from at least June 2007 onwards.
The deficiencies in these allegations include the fact that:
·there is no identification of the terms of the “unconditional offer” referred to or the “duties owed” by the Bank of Queensland;
·even if it were to be permitted in the present proceeding for there to be any examination as to why the “bankruptcy is disputed”, there is no identification of the basis upon which it is said that the appointment of receivers (assuming there to have been such a step taken) was “without basis at law or otherwise”. During the course of his submissions, it is noted that Mr Mulhern accepted that there were apparently seven different applications made in other proceedings in the last twelve months challenging the making of the bankruptcy order against him;
·there is no identification of the “confidential information” or “duties” referred to in paragraph [12], the persons to whom this “confidential information” was released or why the release of this unspecified “confidential information” constituted a “breach”; and
·there is no specification of the contract or its terms apparently invoked or the “contractual obligations” referred to in paragraph [13].
Reference may also be made to the further paragraphs of the Statement of Claim (without alteration):
19.Further or in the alternative the Defendant has engaged in misleading or deceptive conduct, such conduct causing the Plaintiff to suffer the losses referred to herein.
20.Further or in the alternative the Defendant has breached the obligations owed at law including the Trade Practices Act & Corporations Act, such conduct causing the Plaintiff to suffer the losses referred to herein.
21.Further or in the alternative the conduct of the Defendant has acted in an unconscionable manner & has caused the plaintiff to suffer the loss & damage referred to herein.
Again without being exhaustive, difficulties include:
·the failure to identify the “misleading or deceptive conduct” referred to in paragraph [19];
·the failure to identify the “obligations owed at law” referred to in paragraph [20]; and
·the failure to identify the “conduct” of the Bank of Queensland or the manner in which the Bank acted in an “unconscionable manner…” as referred to in paragraph [21].
Even though “great caution” must necessarily be exercised when entertaining an application to strike out a pleading, these deficiencies in the Statement of Claim may properly be characterised – for the purposes of rr 16.02 and 16.21 as:
·“ambiguous”;
·“likely to cause prejudice, embarrassment or delay”; and
·“an abuse of the process of the Court.”
The deficiencies are such that the Statement of Claim also fails with any degree of certainty to set forth “a reasonable cause of action.”
Rule 16.21 provides that an application may be made for “an order that all or part of a pleading be struck out…”. An order may thus be made that the “all” of a Statement of Claim may be struck out – as was the outcome in H 1976Nominees Ply Ltd v Galli (1979) 40 FLR 242. Where a pleading is defective, “the Court can certainly strike it out entirely and is not bound to reframe it for the plaintiff’s benefit”: Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69 at 97 per Jacobs J. The cumulative effect of the deficiencies in the existing Statement of Claim is such that the entirety of the Statement of Claim should be struck out.
Left to one side are further bases upon which the Bank of Queensland sought an order that the Statement of Claim be struck out. It is prudent, however, to briefly set out two of these bases, namely that Mulhern’s Properties lacks necessary standing to claim the orders sought and that the whole of the proceeding is an abuse of process.
It was the contention of the Bank of Queensland that Mulhern’s Properties has no standing to propound any of the causes of action raised in the Statement of Claim. Many of the claims for relief asserted by Mulhern’s Properties arise from the loss and damage suffered in relation to receivers being appointed to the Mulhern Group companies. Paragraph [4] of the Statement of Claim claimed that the shareholding of Mulhern’s Properties in the Mulhern Group was held in trust for Mrs Jacqueline Mulhern. Even if the declarations made by Reeves J were left to one side, the entitlement of Mulhern’s Properties to claim the relief it did as trustee was questioned. The written submissions filed on behalf of the Bank succinctly submitted that the “Applicant is not a shareholder in any of the Mulhern Group companies”. There remained, however, a prospect that Mrs Mulhern, the purported trustee of Mulhern’s Properties, may have a 50% beneficial interest in Celtic Pacific Properties Pty Ltd, one of the Mulhern Group companies. But if this was the case, the Bank of Queensland further submitted that Mulhern’s Properties had no standing to sue it for alleged wrongs committed by it against Celtic Properties Pty Ltd. Nor did Mulhern’s Properties have any cause of action against the Bank, so it was submitted, for any wrong alleged to have been committed against Celtic Properties Pty Ltd. There was submitted to be no pleading which could bring Mulhern’s Properties within any exception to these general propositions.
Separate from its submission that the proceedings were an attempt to re-agitate the issues resolved by Reeves J was a further submission that the present proceedings were being conducted for a collateral purpose of gaining a temporary bargaining advantage. In support, reliance was placed upon the following observations of Lee, Hill and Sundberg JJ in Flower & Hart v White Industries (Qld) Pty Ltd [1999] FCA 773, 87 FCR 134 at 150:
[59]The second submission proceeds on the basis that it was necessary, before a finding could be made that proceedings were instituted and/or continued for an improper purpose, that it be found that the proceedings were based upon a cause of action that was not arguable. This is not, however, correct as the judgments of the High Court in the leading case of Williams v Spautz (1992) 174 CLR 509 make clear.
[60]In that case Dr Spautz in fact had an arguable case in criminal defamation. Nevertheless, it was held that he had instituted proceedings for an improper purpose, that being to secure his reinstatement as a lecturer with a University. What led to the conclusion that the proceedings were an abuse of process was the fact that Dr Spautz had not commenced them to vindicate the legal right which he claimed, but had done so for an ulterior purpose. Mason CJ, Dawson, Toohey and McHugh JJ, referring to the court's power to prevent an abuse of process, said (at 522):
In our view, the power must extend to the prevention of an abuse of process resulting in oppression, even if the moving party has a prima facie case or must be assumed to have a prima facie case.
[61]The foundation for this submission, therefore, is unsound. …..
The collateral purpose was said to be that of “attempting to harass and vex the Respondent into a commercial settlement…”.
Further support for a conclusion that the proceedings are being pursued to achieve a collateral purpose, it is respectfully considered, may also be found in the relief sought in the Interlocutory Application filed by Mulhern’s Properties on 11 March 2013. How much of that relief could truly be regarded as incidental to the relief sought in the principal proceeding was difficult to envisage.
But these further submissions are left unresolved. The other difficulties are such as to found an order that the Statement of Claim should be struck out in its entirety.
Whether there is a factual foundation upon which viable causes of action can be advanced, is a matter that will require the detailed attention of a skilled legal practitioner. If the difficulties that have been foreshadowed as to the standing of the Applicant can be overcome, or if it is necessary to add additional Applicants (if possible), these matters are best left for the Applicant itself to address. The allegations in the Statement of Claim, if they are to be advanced, nevertheless require the discipline and skills of a legal practitioner; the allegations are such that they could not properly or adequately, with respect, be advanced by a non-lawyer – especially one who is as emotionally committed to the allegations as Mr Mulhern.
LEAVE TO APPEAR
Although it may be unnecessary to presently resolve Mr Mulhern’s application for leave to appear on behalf of Mulhern’s Properties in any future course that the present proceeding may take, it is nevertheless prudent to do so. Although he was permitted to present submissions on behalf of Mulhern’s Properties for the purposes of the hearing on 22 March 2013, he should not be granted leave to appear on the company’s behalf on any future occasion.
On at least two occasions Mr Mulhern asserted that the solicitor who had previously entered an appearance on behalf of Mulhern’s Properties continued to represent the company. That solicitor was identified as Mr Michael Smith. Mr Smith was present in Court on 5, 21 and 22 March 2013. On 5 March 2013 - and again on 21 March 2013 - Mr Smith told the Court that he no longer appeared on behalf of the corporation and was to file a Notice of Ceasing to Act. He did not seek to occupy a position at the bar table on any occasion but sat in the well of the Court. A Notice of Ceasing to Act was in fact filed on 19 March 2013. The Court expresses its appreciation for Mr Smith attending in Court and unequivocally stating that he did not appear for the corporation.
In such circumstances it became inevitable for Mr Mulhern to seek the leave of the Court if he wished to appear on behalf of Mulhern’s Properties.
Rule 4.01 of the Federal Court Rules2011 requires a corporation to appear by a lawyer. That rule, in its entirety, provides as follows:
Proceeding by lawyer or in person
(1) A person may be represented in the Court by a lawyer or may be unrepresented.
(2) A corporation must not proceed in the Court other than by a lawyer.
A “lawyer” is defined in the Dictionary to the Rules in Schedule 1 as having the same meaning as in s 4 of the Federal Court of Australia Act. That section, in turn, defines a “lawyer” as meaning “a person enrolled as a legal practitioner of a federal court or the Supreme Court of a State or Territory”. Mr Mulhern is not such a person. He described himself as an engineer. A “corporation” is also defined in the Dictionary to the Rules as meaning “any artificial person other than an organisation”. An “organisation” is defined as having the same “meaning given by section 6 of the Fair Work (Registered Organisations) Act 2009”. Mulhern’s Properties is a “corporation”. The counter-part provision to r 4.01(2) was formerly to be found in Order 9 r 1(3) of the now-repealed Federal Court Rules.
Power is conferred upon the Court, both pursuant to the current Rules and the former Rules, to dispense with compliance with the requirement for a corporation to appear by way of a lawyer. The principles to be applied when exercising that discretionary power are well established and have not been varied by the introduction of the 2011 Rules.
It is recognised that a court should be cautious before permitting a non-lawyer to appear. The “guiding principle”, it has been said, is “the public interest in the attainment of the ends of justice”: Damjanovic v Maley [2002] NSWCA 230 at [83], 55 NSWLR 149 at 163 per Stein JA. Mason P and Sheller JA agreed with Stein JA. When reviewing the authorities, Stein JA provided the following useful summary of the considerations to be taken into account when exercising the discretion:
Principles from the cases
[69] A number of themes or principles run through the cases which are relevant to the exercise of the discretion to grant or refuse leave to an unqualified person to appear on behalf of an unrepresented litigant. They may be briefly summarised as follows:
(a) The complexity of the case
[70] Whether the case is one of complexity or minor or straightforward has often been seen as a discretionary factor…
…
(b) Genuine difficulties of the unrepresented party
[72] These include matters such as unexpected language difficulties and emergencies. An example of the latter was the absence of legal aid in a criminal appeal …
…
(c)The unavailability of disciplinary measures and a duty to the court by lay advocates
[74] Almost every case mentioned these matters as protection for a client when a qualified lawyer represented a party but were protections which were not available where an unqualified lay advocate appears…
[75] In appropriate cases a legal practitioner may be ordered to pay costs. The position is far from clear in relation to a non party lay advocate. There may be extreme circumstances where the conduct of a lay advocate could attract an adverse costs order.
[76] In my opinion, the overall duty of a barrister or solicitor to the court is an important consideration. It is a duty of candour and a practitioner must not knowingly mislead the court. The court is entitled to place reliance on that duty and expect it to be met. The disciplinary codes of the legal profession back up the overriding duty of a practitioner to the court …
[77] Training, qualifications and experience are also important. This is not to say that there are not incompetent lawyers, including some who seek to practice advocacy. For the most part, the market and the disciplinary codes account for them. But with unqualified and uninsured lay advocates, the court loses the benefit of the overriding duty and clients are at a distinct disadvantage. Apart from endeavouring to ensure that a lay person granted leave to appear obeys the rules, there is little a court can do except, in an appropriate case, withdraw the leave to appear.
[78] … However, the absence of a disciplinary code and duty to the court underlines the inappropriateness of permitting unqualified persons to appear apart from an exceptional case.
(d) Protection of the client and the opponent
[79] Lay advocates are unqualified, unaccredited and uninsured. This places a client at considerable risk … A lay advocate does not owe the same duty to his client as does a lawyer.
[80] One should also not lose sight of a lawyer's duty to his/her opponent … None of these protections for the system of justice exist with an unqualified lay advocate. …
(e) Lay advocates in inferior courts and tribunals
[81] There are indications in some of the cases that Local Courts, given their jurisdiction and large numbers of unrepresented litigants, may be more likely to grant leave to unqualified persons. This is, one assumes, in straightforward uncomplicated matters where the party is under some disability in presenting his/her own case. This may also be the case with some specialist jurisdictions and tribunals.
[82] The authorities however suggest that higher courts should be very chary at giving leave. …
(f) The interests of justice
[83] What runs through all of the authorities as the guiding principle in the exercise of the discretion is the public interest in the attainment of the ends of justice. The public has an interest in the effective, efficient and expeditious disposal of litigation in the courts. As a general rule this can best be achieved by parties employing qualified lawyers.
Instances can be provided where a non-lawyer has been given permission to appear: e.g., Hadgkiss v Aldin [2006] FCA 1638. Similarly, instances can be provided where such permission has been refused: e.g., Melaleuca of Australia & New Zealand Pty Ltd v Duck [2005] FCA 1481 at [14]-[15]. Bennett J there observed that a “court has an inherent right in regulating its own proceedings to allow a person, not being a party or a party’s lawyer, to conduct a case on behalf of a party where it is desirable to do so in the interests of the administration of justice”: at [10]. In refusing leave, her Honour concluded that the proposed advocate had “done nothing to expedite matters or to present the case better or more efficiently than Mr and Mrs Duck could do themselves”: at [15]. In Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949, Allsop J (as his Honour then was) declined to permit the Applicant corporation leave for its director and public officer to carry on the proceeding. In doing so, his Honour observed in part:
[34]Another important feature of the correspondence and the conduct of the case to date is a degree of emotive language used by Mr Maiocchi, at times involving sweeping allegations of impropriety by the respondent and its solicitors. Not all litigation can be conducted in peaceful harmony, but one of the fundamental obligations of any practitioner in the discharge of his or her obligations to the client and to the court is the civil and dispassionate communication with other parties to that litigation …
These observations were also relied upon by Hallen J in Tanamerah Estates Pty Ltd v Tibra Capital Pty Ltd [2013] NSWSC 36 at [53] in concluding that it was not appropriate to dispense with the requirements imposed by the rules. See also: AA Shi Pty Ltd v Avbar Pty Ltd (No 4) [2010] FCA 878.
Two of the principal reasons for not exercising the power to dispense with the requirements imposed by r 4.01(2) so as to permit Mr Mulhern to appear for Mulhern’s Properties on any future occasion are the following:
·the form of the Statement of Claim, and the issues sought to be raised, are such that only a lawyer could properly assist the Court in identifying the facts relevant to each of the claims for relief and in identifying the relevant legal principles to be applied; and
·there is either no evidence, or a distinct lack of any satisfactory evidence, as to the inability on the part of Mulhern’s Properties to afford the services of a lawyer. Any reservation as to reliance being placed upon this lack of evidence is dispelled when it is recalled that Mr Mulhern was informed on 5 March 2013 and 21 March 2013 that one factor relevant to a consideration of whether he should be given leave to appear for Mulhern’s Properties was the financial ability of that company to fund a lawyer. His wife, the Court was informed, was a qualified accountant. It was his informed decision to proceed upon the basis of the evidence filed.
Other reasons relied upon in support of reaching the same conclusion that leave should be refused include the following:
·the (perhaps) not unexpected lack of ability on the part of Mr Mulhern, as with many people lacking legal qualifications, during the course of the hearing on 22 March 2013 to focus attention upon the more limited facts relevant to the issues to be resolved and a lack of ability to confine submissions to that which was of present relevance. So much became apparent during the cross-examination of Mr Mulhern when his answers were frequently not responsive to the questions being put, and during Mr Mulhern’s cross-examination of the solicitor who had sworn an affidavit relied upon by the Bank of Queensland. It also became apparent during the course of his submissions. Although Mr Mulhern was reminded from time to time during the hearing on 22 March 2013 that the manner in which he was proceeding could potentially prejudice any decision to be made as to him being given permission to appear, the manner in which he proceeded remained unchanged; and
·the lack of detachment on the part of Mr Mulhern and his inability to focus on the objective facts as opposed to his repeated and recurring exposition of the various “injustices” he claims to have been suffered by himself, his wife and Mulhern’s Properties. Mr Mulhern, for example, has characterised the conduct of the Bank of Queensland as “evil”.
These considerations, it is concluded, provide more than a sufficient basis for refusing permission for Mr Mulhern to appear on behalf of Mulhern’s Properties on any future occasion. It is unnecessary to resolve further contentions advanced on behalf of the Bank of Queensland that permission should also be refused by reason of (for example):
·the “calculated non-disclosure” on the part of Mr Mulhern of (for example) assets owned by him or his wife in New York;
·Mr Mulhern’s conduct which was submitted to constitute an abuse of process; or
· the failure on the part of Mr Mulhern to comply with orders of the Court, the most recent being the failure on the part of Mr Mulhern to comply with the order made on 5 March 2013 requiring all supporting affidavits to be filed by 11 March 2013.
Leave for Mr Mulhern to appear on behalf of Mulhern’s Properties on any future occasion is refused. The application for dispensation from the requirement imposed by r 4.01(2) of the Federal Court Rules2011 is rejected.
The reasons for refusing permission are not overcome by the fact that Mrs Mulhern has apparently written a letter “To Whom It May Concern” dated 15 March 2013, as President of an entity described on the letterhead as “Mulhern Properties”, which “authorize[s] and consent[s]” to Mr Mulhern acting “in its interests in the Australian Federal Court, Sydney”. Whether or not there was a correlation between the corporate entity referred to on the letterhead and the Applicant in the present proceeding was the subject of some uncertainty in the evidence. But that uncertainty need not be resolved.
FURTHER ORDERS SOUGHT BY MULHERN’S PROPERTIES
In addition to seeking leave for Mr Mulhern to appear on behalf of the company, the Interlocutory Application filed on 11 March 2013 further seeks the return of Mr Mulhern’s Irish and Australian passports, and seeks to have his and Mrs Mulhern’s bankruptcies annulled. The basis for the Court making such orders is said to be r 1.32 of the Federal Court Rules 2011.
Repeated reliance by Mr Mulhern upon r 1.32 is misplaced. Rule 1.32 provides as follows:
The Court may make any order that the Court considers appropriate in the interests of justice.
Reliance was placed upon that rule by Mr Mulhern for a myriad of purposes ranging from an order that he be allowed to appear for the Applicant corporation through to providing a source of power for the orders as sought in the Interlocutory Application. The Explanatory Statement to the Federal Court Rules 2011 states that rr 1.31 and 1.32 “support the overarching purpose of civil practice and procedure set out in section 37M of the Federal Court of Australia Act 1976”. See: Pacific Boating Group Pty Ltd v Freedom Boating Club Pty Ltd [2012] FCA 72 at [22]. Rule 1.32 confers a discretion confined in its exercise by both the Federal Court of Australia Act and the Federal Court Rules2011. It is not to be construed as conferring a discretionary power freed of the considerations otherwise relevant to (for example) an exercise of discretion to permit a non-lawyer to appear for a corporation. Nor is it to be construed as conferring an independent source of power freed from the particular jurisdiction of the Court which has been invoked or freed from a consideration of the issues raised for resolution in (for example) a statement of claim. Once the jurisdiction of this Court has been properly invoked, s 1.32 is not to be construed as conferring a power upon the Court to make any such other order that it may consider to be “in the interests of justice” irrespective of the causes of action raised for resolution.
Orders 2, 3, 4 and 5 of the Applicant’s Interlocutory Application of 11 March 2013 are also rejected.
SUMMARY JUDGMENT APPLICATIONS & TRANSFER
Both the Applicant and the Respondent have sought orders for summary judgment in their favour.
In advance of further consideration being given to the material facts that should be pleaded and the identification of such available causes of action as may emerge upon a proper consideration of the materials available, it is considered premature to entertain any application for summary judgment. Even though the bar may well have been lowered by the introduction of s 31A of the Federal Court of Australia Act (Hicks v Ruddock [2007] FCA 299 at [12]; Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117 at [25], 178 FCR 401 at 408 Spender, Graham and Gilmour JJ), it is not considered appropriate to entertain an application for summary judgment without affording the Applicant an opportunity to seek to amend – with the assistance of a lawyer – the existing Statement of Claim. When drafting any amendment, the legally skilled draftsman will have the benefit of the written submissions filed on behalf of the Bank of Queensland. Whether or not one or other of those difficulties is addressed or not considered to be as difficult as envisaged by the Bank – and not resolved by this Court – is a matter to which future consideration can be directed.
An order striking out the existing Statement of Claim in its entirety is not to be construed as precluding the ability of Mulhern’s Properties to file a fresh Statement of Claim which does comply with the Rules of this Court. Within a morass of poorly organised facts and badly articulated arguments a lawyer may be better able to discern a cause of action than an unrepresented litigant and a better able to discern a cause of action which requires judicial resolution. Considerable caution must be exercised before any Court precludes a litigant from placing before a Court a properly articulated cause of action: Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 536-537. Kirby P there expressed this need for caution as follows:
…. the appellant being a litigant now appearing in person, care must
be taken to ensure that this significant disadvantage does not deprive her of
the opportunity to have her claim, if any, determined according to law. Persons unfamiliar with the rules of pleading and the technicalities which surround the drafting of a statement of claim in adequate and permissible legal form are inevitably, if unrepresented, at a disadvantage. Courts should approach the peremptory termination of the litigation with special care to ensure that, within the possibly ill expressed and unstructured statement of the legal claim sought to be ventilated, there is no viable cause of action which, with appropriate amendment of the pleading and a little assistance from the court, could be put into proper form. If this can be done, the court should avoid the summary termination of the proceedings for this will prevent the Court from examining any merits of the case, once the statement of claim is struck out. Unrepresented litigants present our courts with significant difficulties.Hope and Samuels JJA agreed with Kirby P.
The Interlocutory Application filed by the Bank of Queensland on 5 March 2013 also sought an order that the proceedings be transferred to the Queensland registry of this Court. An order to that effect was not pressed during the course of the hearing.
CONCLUSIONS
Mr Mulhern is not to be given leave to appear on behalf of Mulhern’s Properties on any future occasion. The Interlocutory Applications filed by Mulhern’s Properties on 23 January 2013 and 11 March 2013 are both to be dismissed. Other than making an order striking out the Statement of Claim, the Interlocutory Application filed by the Bank of Queensland on 5 March 2013 is also to be dismissed. The Statement of Claim is to be struck out in its entirety.
There is no reason why the Bank of Queensland is not entitled to its costs, to be paid by Mulhern’s Properties as taxed or agreed. Although only one of the orders sought in their Interlocutory Application of 5 March 2013 has been allowed, this represents substantial success on behalf of the Bank of Queensland. It is not considered appropriate to make an order, as sought, for indemnity costs.
Rather than leaving the proceeding in limbo, it is to be stood over to 9.30 am on Thursday 30 May 2013 with a view to then making directions, including directions as to the filing of any fresh Statement of Claim which does comply with the Rules of this Court. Whether or not an order should then be made staying the proceeding in the absence of a lawyer appearing for the Applicant is a matter that can then also be addressed.
THE ORDERS OF THE COURT ARE:
1.The Statement of Claim filed on 18 December 2012 is struck out in its entirety.
2.The Interlocutory Application filed by the Applicant on 23 January 2013 is dismissed.
3.The Interlocutory Application filed by the Applicant on 11 March 2013 is dismissed.
4.Save as to order 1, the Interlocutory Application filed by the Respondent on 5 March 2013 is dismissed.
5.The Applicant is to pay the costs of the Respondent.
6.The proceeding is stood over to 9.30 am on Thursday 30 May 2013 for the purpose of giving directions as to the future conduct of the proceeding.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. Associate:
Dated: 3 May 2013
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